Refinancing is becoming a hot topic as mortgage rates are lowered, almost an average of 5.7% for a 30 year fixed rate loan. In some cities, lenders already offer 5.5% or less and no more than $1,000 in fees. This has happened since mortgage rates plunged to 20 year lows in mid January.

These are new historical lows as mortgage rates have ranged between 6 to 10% during the past twenty years. The difference between monthly payments between today’s rates and the lowest historical lows is not much, around $25 for every $100,000 and thus refinancing has become a serious option for most home owners.

Most borrowers may be put off by the 20% of the loan amount that they have to put up as banks and mortgage companies will only loan about 80% of a home’s current value. However, there are several options that are available to a home buyer like applying for an FHA loan or a VA loan.

The FHA loan is a home mortgage guaranteed by the Federal Housing Authority and finances up to 95% of a home’s value. Another option is the Veteran’s Affairs which funds up to 100% of the home’s value and it may be the only program that offers 100% financing.

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